London - Sportswear giant Adidas AG reported another year of strong sales
and growth, as it remains firmly on track to achieve “quality growth” for
2018 following its FY17 financial report. However, against this strong
performance comes growing concerns that Adidas has failed to assess its
human rights risks in its global supply chain, as the Clean Clothes
Campaign (CCC) prepares to file a complaint against the sportswear company
for breaching OECD guidelines in Indonesia.

The CCC, the garment industry’s largest alliance of labour unions and
non-governmental organisations, is set to file a complaint against Adidas
to the German National Contact Point of the OECD for failing to provide
access to remedy for 327 workers from their Indonesian footwear supplier
Panarub. The case stems back to July 2012, when 2,000 workers of PT Panarub
Dwikarya (PDK), part of the Panarub Group, went on strike to demand better
working conditions, the right to freedom o association as well as to be
paid the provincial sectoral wage. However, on July 23, 2012, 1,300 workers
who participated in the strike for improved working conditions and wages
were dismissed by the factory. Now, more than five years later, 327 workers
have yet to receive their severance pay.

Adidas accused of failing to provide access to remedy for 327 factory
workers in Indonesia

Back in October 2016, the International Labour Organisation (ILO) Committee
on Freedom of Association concluded in its interim report that the
dismissal of the PDK workers was unjustified and an abuse of the workers
fundamental right to freedom of association, according to its standards. In
its complaint, the CCC calls on Adidas to use its leverage over Panarub and
urge them to pay their former workers their rightful severance payment. The
NGO argues that Adidas is directly connected to the workers’ rights abuse
through its business relationship with Panarub and in turn, has contributed
to it by condoning the refusal of its supplier to provide severance pay to
the former PDK workers.

“In the last five years Adidas has insufficiently used its leverage over
one of its main shoe suppliers Panarub to provide workers with severance
payments,” says Mirjam van Heugten from Clean Clothes Campaign in a
statement. “As a direct consequence of this, workers have been evicted from
their homes or had their children drop out of school because they could not
pay the school fees anymore. One woman died after she could not afford her
medication anymore due to her debts. Adidas has the leverage to make sure
the women get what is legally owed to them, and their struggle can stop.”

The CCC states that Adidas has violated the OECD Guidelines for
Multinational Enterprises, as well as the UN Guiding Principles on Business
and Humans Rights that states companies need to assess their human rights
tricks, carry out human rights due diligence and in the event of human
rights abuses in their supply chain, mitigates and provide access to remedy
to those affected - in this case, the former PDK workers. The NGO stressed
that Adidas was informed about the labour rights violations in 2012 that
eventually led the workers to strike that summer.

At the time the German sportswear brand instructed its supplier to halt the
production of its footwear at the aforementioned factory - a decision which
failed to stop further human rights abuses from taking place. Other
measures taken by Adidas after the 1,300 workers were unfairly dismissed
did not result in Panarub in offering remedy to its former workers.
However, Adidas footwear was produced at the PDK factory when the first
union members were dismissed (February 2012) up until shortly before the
strike. In addition, Adidas continues to do business with Panarub Group,
the parent company of PDK.

Adidas previously issued an open letter in response to the Clean Clothes
Campaign plight severance payment for the former PDK workers. In the open
letter, Adidas noted that it was disappointed that recent negotiations,
instituted by the Indonesian government, had not reached a “successful
conclusion” as the amount of compensation offered was insufficient. The
sportswear giant also stressed that it had not neglected its responsibility
to address human rights violations, claiming they have “stepped outside the
normal boundaries of what would be expected of any buyer to help resolve
this case – given the fact that we held no active or ongoing relationship
with PDK.”